Global Report

In both India and China, the growing middle class is in trouble

Two new books paint a picture of the developing economies’ rising incomes—and rising anxieties

Rana Dasgupta's book Capital

At the beginning of this century, Rana Dasgupta left his job as a New York City marketing consultant for a life as a would-be novelist in Delhi, the capital of his father’s home country of India. Born in England and educated at Oxford, Dasgupta arrived to a city brimming with excitement and ambition, one that promised to quickly outpace the western hubs of his youth.

The Indian economy, liberalized in 1991, was booming. Artists, writers and bohemians, including Booker Prize–winning novelist Arundhati Roy, were flocking to the capital. And the business community, flush with outsourcing billions, was freshly alive to the opportunities of globalization. “[T]he anticipation of those years had a much larger scope than the city itself,” Dasgupta writes in Capital, his recent non-fiction book about Delhi ($32.99, HarperCollins). “It sprang from a universal sense: What will happen here will change the entire world.”

READ: India’s oil giants plan for growth as government control recedes »

More than a decade after moving to Delhi—where he published two prize-winning works of fiction—Dasgupta senses the promise of those years slowly fading away. In Capital, Dasgupta presents a chaotic city, rife with corruption and poverty, where an aristocracy of oligarchs and their children rule in all the ways that matter most. His story is compelling, if scattered at times, told with a kind of see-sawing desperation that matches in structure the city it describes. It also undermines one of the defining business narratives of our age.

The promise of the rising global middle class—the billions lifted out of poverty and into the consuming, commercial world—is a set tenet of MBA orthodoxy in 2014. The future of business is global, we’ve been told. And it seems undoubtedly true. Billions have been lifted out of poverty, and they are buying in ways they never have before. But they don’t yet enjoy the middle-class comfort the West does. And, as Dasgupta writes in Capital, it’s unclear how many ever will.

READ: Why Uniqlo is opening stores in Bangladesh »

Dasgupta does his best to capture a vast swath of Delhi’s complex business and social milieu, interviewing entrepreneurs, moguls, marketing professionals, fashion designers, slum dwellers and the lazy rich. What he finds is satisfaction, of a sort, among Delhi’s tiny cluster of ultra rich. One worker speaks with manic delight about the brands he deals with as an advertiser. (“The only way you can be effective is if you start living those brands, if you become those brands,” he says.) But for many Dasgupta meets among the still small middle class, anxiety reigns: they’re envious of the super wealthy above them and terrified of slipping back into the desperately poor masses below.

READ: How Imax plans to crack India, the world’s biggest movie market »

Nowhere is this more evident than in Delhi’s medical system. Until the 1980s, all Indian hospitals were public. Over the years, more and more privately owned facilities have opened. For some that has meant better, more comprehensive care; for others, it’s been a disaster. Dasgupta spends most of a chapter with Amit and Shibani, cousins who lost an elderly relative after a financially ruinous trip through Delhi’s private medical system. “They never told us anything except, ‘She needs more medicine.’ There was nothing we could do except pay the bills,” Shibani says. “Every evening we received the bill for the day, and we handed over the cash we had borrowed from our family.”

Medicine is only one area where the state has stepped back from the lives of Delhi’s middle class. Its main role now, Dasgupta believes, is to keep the poor at bay. That vision in and of itself is nothing new. What is new, though, is Dasgupta’s belief that it isn’t temporary or simply a case of growing pains. He sees Delhi as a place where flourishing wealth and the state have stopped lifting its citizens out of poverty.

In that way, Dasgupta’s vision of Delhi is not much different from the one Evan Osnos offers of China in Age of Ambition ($31, Farrar, Straus and Giroux). Osnos, who spent eight years reporting from Beijing for the Chicago Tribune and The New Yorker, presents a much less desperate and angry view than Dasgupta. But his book is, in its own way, no more optimistic.

READ: Market research companies find opportunity in China »

Like India, China opened its economy to the free-ish market after decades of central control. And, as in India, hundreds of millions have since been lifted from the lowest dregs of poverty into more stable positions. But despite continued economic growth, social mobility appears to have stalled in recent years. “The longer I lived in China,” Osnos writes, “the more it seemed that people had come to see the economic boom as a train with a limited number of seats.”

Part of that, clearly, is just a case of rising generational ambitions. For the book, Osnos spent years tracking a young would-be English teacher named Michael. Michael’s father, a coal miner, worked in unspeakable conditions where colleagues died monthly and workers were paid barely enough to live on. But he was also, if not completely fulfilled, then perhaps satisfied with his lot. He put his son through school. He owned an apartment. He didn’t starve. For Michael, though, brought up in China’s age of ambition, none of that was nearly enough. Michael believes he is destined to have more—more success, more money, more acclaim—and bristles at his inability to get it right away. The longer the book goes on, in fact, the less likely it seems he—or his larger cohort of educated masses attempting to climb into the global middle class—will ever get it at all.

Osnos ends his book on an uncertain note. There “is nothing predestined about what kind of country [China] is becoming,” he writes. If from the outside, the world sees China “marching inexorably toward better days,” inside, people are “more circumspect.” Dasgupta closes with more definitive pessimism. He looks at Delhi and the rest of the developing world, and sees aspiring classes desperately trying—and mostly failing—to lift themselves out of the “pathetic condition of the city.”

Both authors disrupt the tidy story we tell ourselves, in keynote talks and business schools, about the rise of the Global South. There is a vision of India and China—and also Brazil, South Africa and Russia—that sees them inexorably turning into places very much like our own. But while the future of business is global, it’s hard to say what that will really look like, in Delhi, Beijing, or anywhere else.